Pubdate: Tue, 01 May 2018
Source: Winnipeg Free Press (CN MB)
Copyright: 2018 Winnipeg Free Press
Contact: http://www.winnipegfreepress.com/opinion/send_a_letter
Website: http://www.winnipegfreepress.com/
Details: http://www.mapinc.org/media/502
CANNABIS SALES WON'T BALANCE BUDGET
Cannabis sales likely won't prove a financial bonanza.
Those counting on help from cannabis sales to balance the provincial
budget are in for a disappointment.
As far as Statistics Canada can tell, cannabis prices in this country
have been dropping for the past three years, perhaps the past dozen
years. Since weed-market watchers in the United States have found
roughly the same thing, it's probably true.
Canada's provincial treasurers, along with private investors in the
cannabis trade, may still be able to turn a profit, but the bonanza
that used to beckon has probably evaporated already.
Canada's national statistics agency studied the cannabis market as
best it could. The data are scanty and not highly trustworthy since
most cannabis production and sale is, for the moment, illegal in Canada.
Those counting on help from cannabis sales to balance the provincial
budget are in for a disappointment.
As far as Statistics Canada can tell, cannabis prices in this country
have been dropping for the past three years, perhaps the past dozen
years. Since weed-market watchers in the United States have found
roughly the same thing, it's probably true.
Canada's provincial treasurers, along with private investors in the
cannabis trade, may still be able to turn a profit, but the bonanza
that used to beckon has probably evaporated already.
Canada's national statistics agency studied the cannabis market as
best it could. The data are scanty and not highly trustworthy since
most cannabis production and sale is, for the moment, illegal in Canada.
The main thing that's been happening in the cannabis market, it seems
from U.S. sources, is that production increased enormously in Oregon
and California when those states began to permit the growing of
marijuana. With abundant supply, prices dropped. Since Canadian
growers export $1 billion worth of their output, the glut in the U.S.
affects Canada as well.
By StatsCan's estimates, about 4.9 million Canadians bought cannabis
in 2017, which would be around 13 per cent of the national population.
Nova Scotians were the highest per capita users, consuming 27.1 grams
per capita. British Columbia at 24.6 grams per person and Alberta at
24.1 grams per person were the next heaviest-using provinces.
Heavy weed consumption did not, however, mellow the public mood in
those two provinces, which have been screaming abuse at each other
over the Trans Mountain Pipeline expansion.
Quebec consumers enjoyed Canada's lowest cannabis prices last year,
around $6.19 per gram.Users in Nunavut and the Northwest Territories
were paying over $10 a gram. StatsCan is cagey about estimating what
the prices used to be, but it believes prices in all provinces and
territories dropped in 2016 and again in 2017. The trend has been
generally downward since 2005.
Dropping prices should make it easier to extract the cannabis trade
from the hands of organized crime. Why would the gangsters want to run
the trade if the profits are shrinking?
Prime Minister Justin Trudeau's government, however, also wanted to
keep cannabis out of the hands - and the bloodstreams - of young
people. Lower prices may frustrate that goal by bringing the drug
within a price range adolescents can afford.
Provincial governments will regulate the cannabis trade once Mr.
Trudeau's new rules take effect. They may be able to jack prices up,
both to enhance their revenues and discourage consumption. Their
pricing power will, however, be limited by competition with the large
informal sector that now dominates the market. Consumers will not
happily pay $8 a gram at the government store if an independent dealer
is selling for less.
Provincial finance officials have been gleefully counting up the large
sums they will rake in once Mr. Trudeau gives them cannabis monopolies
alongside their liquor monopolies. They should not spend the money
yet. When the feds last year offered a 50-50 split of marijuana tax
revenues, they said they wanted all of it, then settled for 75 per
cent. They were then, however, assuming a retail price around $10 a
gram. In a retail environment where a dealer can potentially offer
lower prices, however, the government stores won't move much product
at $10. They may have to scale back their expectations.
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MAP posted-by: Matt